Archive for August 20th, 2012

Unless you’ve been living under a rock for the past few months, you’ve become aware that there’s quite the political storm brewing around Mitt Romney’s refusal to release his tax returns from prior to 2010. It got so bad recently that Senate Majority Leader Harry Reid quoted an “anonymous source” as telling him that Romney paid no tax for a 10-year period, with Romney responding by promising that he’d paid at least 13% in tax during every year in that span, while conveniently neglecting to clarify whether that 13% was federal income tax, or some combination of payroll, state, and property tax.

Now, I’ve been as big a critic of Mitt Romney’s tax proposals — largely through the casting of doubt that it is even remotely politically possible that enough base broadening can be done to render his promised tax rate cuts revenue neutral — as you’ll find on the interwebs. As a result, people have been asking me why I haven’t jumped on board and written about Romney’s refusal to satisfy the cries that he publish his returns. And the reason, quite simply, is because I don’t care.

Look…I get the interest, I really do. We want to know what the “money man” in our oversimplified view of the upcoming election was hiding prior to 2010. But allow me to remove the suspense: if we could get our hands on prior returns, I’m very confident we’d see signficant (>$25 million) amounts of income, a very low (<10%) effective tax rate, and indications of large amounts of offshore investment (such as disclosure filings under the FATCA program).

The reason we’re going to see these things is…wait for it…because Romney made a ton of money prior to 2010. And people who are rich generally don’t get that way by writing a whole lot of checks. So anything Romney could do within the confines of the law to lower his tax obligation each year was most certainly considered and implemented by his team of high-paid advisors. To expect anything else from a man earning well in excess of $10 million per year is naive and, well, just plain silly.

This is who Mitt Romney is, at least in part: a rich guy with rich guy tax problems and rich guy tax solutions. Romney wasn’t obligated to pay any more tax than the law required, and he very likely didn’t. His refusal to overpay the government shouldn’t be an indictment on his ability to lead a government. As a voting public, we’ve got to be able to compartmentalize Mitt Romney the presidential candidate from Mitt Romney the aggressive taxpayer. As history has proven, you don’t have to be a Boy Scout to be great at your job. Ty Cobb was, by all accounts, a racist and an as*hole, but he sure could hit.

As a result, the burden falls on us, not on Mitt Romney, to make peace with his tax history. If you’re a fan of his principles and a believer in his stated policies, than his history as a rich guy shouldn’t impact your view on whether he can run the country. But if you don’t think he can lead the nation to a new era of prosperity, it shouldn’t have anything to do with his failure to show you his Form 1040.

On Saturday morning, my neighbor talked me into doing a mountain bike race to the top of the Aspen ski resort. At registration, it looked like there were only 10 other people stupid enough to spend a beautiful morning suffering up 3,400 vertical feet of dirt road, causing me to wonder if I might have a shot at a top-three finish.

As we got set to start however, I looked around at who else was toeing the line: there was Lance Armstrong, the seven-time Tour de France winner turned Aspen local, Neal Beidelman, a local ski-mountaineering legend and Mt. Everest hero, marathon mountain-bike national champion Anne Gonzales, and local freak Max Taam, who was coming off a win the previous weekend at the Steamboat Stinger.

Needless to say, I didn’t sniff the podium. Aspen is not a town that favors the mere mortal.

On to the tax stuff… For those of you who aren’t yet bored with reviewing the tax returns of people who aren’t paying you to do so, on Friday Republican VP candidate released his 2010 and 2011 returns to the public. There was nothing starting about either return. Of course, given the firestorm over his own tax history, Mitt Romney would have been crazy to appoint anyone with any sort of skeletons in their financial closet as his running mate.

The items in this blog are informational only and are not meant as tax advice. Consult with your tax advisor to determine how any item applies to your situation. A select group of Tax Professionals of WithumSmith+Brown write Double Taxation, and any opinions expressed or implied are not necessarily shared by anyone else at WithumSmith+Brown.

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